Where the EU crisis started

[toxic avenger]

have you head the news this week that there is an employment boom in germany? last week unemployment grew to record levels in spain, greece etc.

so who are the mugs? us or the germans? because of the structural inbalance money and influence is flooding in to germany at the expense of the pigs. they must be laughing at our stupidity.

I don't think they deliberately designed it that way - the Germans are more uncomfortable than anyone (particularly the French) with being put in the position where they are calling the tunes. The structural imbalance at the outset, plus the problem of deciding in which way interest rates go or the inability to use currency policy to devalue out of recession, these are almost inevitable consequences of a monetary union (some of a number of reasons I opposed it). If there is guilt then it lies in over-enthusiasm for a superficially laudable ideal, rather than for some kind of Machiavellian plot to dominate Europe..

[MrD011]

maastricht

[toxic avenger]

In terms of the faults and flaws within the Eurozone and the path that led to Maastricht and further monetary integration, 1989 and German unification is a fairly logical place to begin. Part 1 only goes to 1997 or so. Yes I agree that the web is far more tangled but one can see in 1989, as the presenter states " a euphoria" which overcame common sense and set off a chain of events that are in large part to blame for where we are now.

That 'euphoria' pre-dated 1989, I would argue. Moves towards a single currency were in place long before then, and the integration ideal goes back decades beyond that. I think you have to examine the ideal itself in order to understand that particular thread's contribution to the knot. The other things that contributed, the specifically national failings, also need to be examined, and many of them have roots in history...

[Sucker Punch]

Musc of the crisis can be traced back to the EU Financial Services Action Plan which sought to create a new framework for interbank lending through-out Europe. This is how the Irish Banks leveraged themselves to a factor of 7 times greater than the gross domestic product.


I haven't had the time to trawl through the finer details of the document below, however note the role for national regulators in the introduction and ask yourself why poor auld Patrick Neary never got the memo:

Implementing the framework for financial markets: Action Plan I. Introduction:
A single market for financial services has been under construction since 1973. Important strides have been made towards providing a secure prudential environment in which financial institutions can trade in other Member States. Yet, the Union’s financial markets remain segmented and business and consumers continue to be deprived of direct access to cross-border financial institutions. Now, the tempo has changed. With the introduction of the euro, there is a unique window of opportunity to equip the EU with a modern financial apparatus in which the cost of capital and financial intermediation are kept to a minimum. Corporate and household users of financial services will benefit significantly, and investment and employment across the Union will be stimulated. The structural changes triggered by the euro also herald new challenges for financial regulators and supervisors which call for effective answers, with a view to ensuring the balanced regional distribution of the benefits of competitive and integrated financial services markets.

http://ec.europa.eu/internal_market/.../action_en.pdf